The Slow Growth Rate of Technology

75 views 11 pages ~ 3003 words Print

The age of game-changing technology is the past. The world must get used to a slower growth rate.

Introduction

There has been a slowdown in the rate at which innovators are coming up with game-changing technologies. In particular, the link between innovation and productivity in the technological field has weakened as there are incidences of stagnation. It is important to note that the slowdown is attributable to the depletion of technological opportunities (Andrews, Criscuolo. and Gal 2016, p.24). However, counterarguments have been brought forth claiming that there are numerous opportunities in different industries that include genetic oil engineering, computing, and other sectors. Individuals born before the 1970s saw significant technological innovations taking place. In particular, it was during this period that people witnessed the first flight, advancements in the building that saw skyscrapers take shape, the moon landing, suspension bridges, interstate highways, radio and television, atomic bombs, and antibiotics. However, the people conceived after 1970 managed to see inventions such as the personal computer, nanotechnology, biotechnology, search engines, cell phones, and web browsers. It is important to note that the recent technological breakthroughs have resulted in the evolution in technology whereby air travel has become affordable, hospital treatment has advanced, car driving has become safer, and communication has become more reliable. The problem arises when examining whether inventions such as social media and mobile phones are convincing to be regarded as game-changing technologies. Besides, the progress made by the previous human generations makes the current innovations to appear predictable. On the other hand, investment in Research and Development (R&D) has declined which has, in turn, led to fewer game-changing technology innovations. In a move to explain the few game-changing technologies, the paper lists stagnancy in science, capital markets are cold, inadequate support from the government, stringent patenting regulations, virtual reality, and importance of patience as the primary reasons. Thus, the world must get used to a slower growth rate.

Reasons for the Slow Growth Rate

Stagnancy in Science

The propositions by Isaac Newton contributed significantly to the Industrial Revolution and other inventions made in the 18th and 19th

Centuries. Moreover, the light shed on the quantum behavior in physics and chemistry paved the way for microelectronics, the internet, lasers, space travel, radio and television, and atomic energy technologies. On the other hand, the 21st century is focusing on nanotechnology, human genomics, and solar energy to set the ground when it comes to game-changing technological innovations (Gordon 2015, p.54). However, the advancements of the 21st century rely on the old scientific reasoning which means that there will be no significant difference from the existing technologies. On the other hand, the reliance on scientific reasoning has led to the decline in productivity which has been dismal in the past decades. The world needs to acknowledge that technological slowdown is real as America has witnessed a sluggish progress in innovations since 2004 which has been lower than that recorded in the 1800s (Cette, Fernald and Mojon 2016, p.18). Further, the benefits derived from the use of applications, social media, and cloud computing could be deceiving people are making progress. Hence, the summation of the growth that has resulted from digital advances summed up under one roof clearly shows that technological growth is inadequate and there is the need for more progress.

The economic impact of the recent technological advancements is an indication that there is slow growth. In particular, mobile applications and social media have limited benefits to households. Besides, the benefits are not comparable to the electrification of homes, medical breakthroughs, and the construction of subway systems that help ease traffic. When it comes to productivity, the output of workers is measured in hours. It is important to note that producing an output requires capital which can be software and there is the need for labor. However, the advancements in software have not accounted for the increase in the output of workers in all environments. Concerning the total factor productivity, advancements in technology, especially machines, contributes to optimal output. There has been a slight growth in productivity in recent years which translates to a slow pace of technology and innovation progress. Between 1920 and 1970, the total factor productivity indices in the United States stood at 1.89 percent (Cowen 2011, p.37). There was a decline from 1970 to 1994 to 0.57 percent and then jumped to 1.03 percent between 1994 to 2004. The period between 1994 and 2004 was when information technology coupled with the internet yielded substantial economic impact. However, the benefits were short-lived as the total factor productivity between 2004 and 2014 dropped to 0.4 percent (Cette, Fernald and Mojon 2016, p.15). Thus, with the slow growth in the technological breakthroughs, the world should brace itself for a disappointing long-term economic growth.

The notion that there have been significant technological advancements in the 21st

century is dominant to the point that it becomes difficult to challenge it (Andrews, Criscuolo. and Gal 2016, p.24). The headlines in the media have captivating stories that talk about new cures and breakthroughs in space travel among others. However, a moment's thought reveals that with the available innovations, there are a couple of years left before the world gets there. On the other hand, the slight progress made is the mere incremental improvement on the already existing technologies. Besides, most progress reported in the 21st-century fall under information technology which has led to the stagnation currently experienced.

Capital Markets Are Cold

Investors are unwilling to finance projects that will take a long time to offer returns. Moreover, they shy away from the capital-intensive industries that are in most instances overburdened by the state regulations. It is important to note that the slow growth in technological advances has been attributable to the many barriers posed by the federal agencies. Besides, there has been a surge in algorithmic investments as most people find the venture to have fewer restrictions, unlike the inventions that require a physical location. On the other hand, the recent trends have revealed that the increase in R&D efforts in most technology companies has led to diminishing returns which has forced these firms to cut their budgets (Lundvall 2017, p.545). There has been criticism on the assumption that economic growth spurred by technological breakthroughs is a continuous process. Investors have refuted that the slowdown in the economic impact brought about technology is cyclical as they consider that the benefits of the technology take a relatively long period before realization. Hence, they have been wary when investing in technology projects which have contributed to the slow growth in game-changing technologies.

Innovation could be at the diminishing returns phase. In a similar manner, there was little growth in the 1800s, it could be the case in the future (Bonaiuti 2018, p.1804). The pessimistic approach taken by investors makes them view technological breakthroughs to be currently in a plateau stage. Besides, they doubt how long it will take before their returns materialize since the short-term benefits they derived from game-changing technologies are nearly exhausted. It is important to note that technological innovators are focusing on sustainability whereas productivity, which is the interest of investors, is sharply declining. For example, the quantity of transistors produced annually continues to double every year. Moreover, the number of experts required in doubling the density of a chip is close to 18 times the figure in the early 1970s. For this reason, the decline in productivity at a rate of 6.8 percent every year in technology breakthroughs has become unattractive to investors leading to minimal funds going into R&D (Daveri and Parisi 2015, p.898). Innovators need to undertake a considerable number of experiments coupled with pursuing higher education for the realization of game-changing technologies. Thus, the limited access to funds to allow them to conduct these exercises has resulted in low productivity and the slow growth rate.

Inadequate Support from Government

The politicians have continued to implement policies that favor state entitlement while leaving out science. In particular, the government pursues hopeless ventures while starving game-changing ventures such as space exploration. Innovation and entrepreneurship play a significant role in steering the economic development of most countries and the United States is not an exception either. It is important to note that the wellbeing of the United States has improved over the years with the help of science and technology. For example, amid the fears the United States faced from the Soviet Union in 1957, it invested heavily in science, technology, engineering, and aerospace. During the period, the private and the public sector managed to create jobs, uplift the United States leadership, and fuel innovation. However, the current policies do not give science and technology the attention it deserves as only 2.8 percent of the federal budget goes to research and development. The amount is less than 4.3 percent spent by Sweden, 3 percent by South Korea, and 3.1 percent by Japan (Gordon 2015, p.59).

The private sector invests a small amount in innovation which means that the government needs to fill the remaining gap. In particular, fundamental research, which has in the past led to game-changing technologies relies on government funding as the experiments require big laboratories. Besides, if the technologies are to get into the market quickly, there is the need for adequate funding. Whereas there are instances where individual technology companies have contributed to the slow growth in technology breakthroughs, policies by the government have hampered the intentions to accelerate innovations in the technological field. It is important to note that in some of the projects by the government to boost innovation, the programs have failed to realize the value for money. The support offered to encourage innovation lacks decentralization which slows the process of implementation. Moreover, the programs meant to encourage technology breakthroughs do not last more than one financial year which affects the progress made along the way (Bonaiuti 2018, p.1807). For this matter, the lack of stability in the government initiatives when supporting innovation has had a little impact on the willingness of experts and scientists when it comes to taking up new challenges. The lack of competitiveness and inadequate incentives in promoting technological advancements has contributed to slow growth. Government officials tend to focus on systemic problems related to human resource systems and constrained budgets which deters the innovations from progressing. The sorry condition the innovation programs by the public are in explains why most countries are experiencing economic stagnation.

Stringent Patenting Regulations

Evolution in the industrial sector is growing at a fairly higher rate. In particular, the growth in the number of industries coupled with the slow growth in technology breakthroughs is highly likely to meet the goals of nanotechnology and human genomics in the future. The primary reason is because the game-changing technologies that have seen industries grow have patents and this has inhibited innovation among young generations (Hopenhayn and Squintani 2015, p.203). Besides, in a move to stay competitive, innovators are only left with the option of out-doing the previous inventors. It is important to note that the patents have contributed to the slow growth as extortionists sue those applying the same thinking and consider it as a way of benefiting themselves. Whenever patent licenses are used by companies, there is little to no innovation. The Non-practicing entities which have the responsibility of collecting the licensing fees hinder the growth of innovation given their middleman role. They extort licensing fees from firms even in situations where the patent is not used in the production of new items.

Patents create obstacles when it comes to technological innovations as they do not allow collaboration between competitors. It is important to note that the world is interconnected and ideas that lead to game-changing technologies need to be fast-paced. For this reason, the economic value of inventions made in the 21st

century will only be optimal if there is a collective effort of the key players in a given technological field (Hopenhayn and Squintani 2015, p.208). Moreover, the collaboration will pave the way for the free flow of ideas. However, patenting deters the collaboration leading to slow growth in innovation. Whereas individual software companies are ready and willing to come together to drive the needs of the society and the economy, the companies that have hired them are up in arms with one another. Hence, to accelerate the growth in technological innovations, innovations need to come up with fair patenting regulations.

Virtual is Becoming Reality

Augmented reality has become an attractive venture and this has contributed to putting aside ideas like space exploration. In particular, the number of virtual reality exhibitors is increasing sharply from the previous years. It is important to note that virtual reality has also experienced slow adoption owing to the high costs associated with the technology. Virtual reality requires specialized gadgets in a move to improve the experiences of people (Deb et al. 2015, p.451). Besides, virtual reality needs a specialized application and the competing companies want to develop their own unique application. Therefore, there has been confusion in the market that has led to slow progress over a long period of time. Moreover, the expensive costs of virtual reality gadgets have made consumers to doubt the experiences of the technology as it is still a young trend.

A monopoly in virtual reality is not appropriate as there is the need for competition. The big players such as HTC have acknowledged that locking the devices to a specific set of games will have a detrimental effect (Deb et al. 2015, p.454). Going past the price hurdle will be difficult as the competing companies are trying to choose the appropriate price that will position them in the market. Besides, there are cheaper entry-level alternatives that work with the mobile platform. Hence, there has been slow growth owing to the pricing issue that the competitors are currently facing. On the other hand, some virtual reality devices have adopted wireless technology which is not supported in most generic computers. Therefore, consumers may be willing to spend substantial amounts to purchase virtual reality devices but compatibility remains a problem. For this reason, innovation in game-changing technologies is undergoing slow growth as designers are making little progress while keeping the compatibility issue in mind.

Patience is Important

There is the need for patience as innovations such as three-dimensional printing are slowly taking shape and will soon transform everything. Despite the slow growth, inventions such as the Geographical Position Satellite (GPS) took over a century for their actualization to take place (Byrne, Fernald and Reinsdorf 2016, p.115). On the other hand, scientific progress such as DNA sequencing has undergone multiple tests in decades to get to the market. For this reason, game-changing technologies do not arise from anywhere. Whereas people have faulted the lack of adequate funding in the innovation systems, patience capital remains one of the main ingredients that still misses. It is important to note that game-changing technologies require long-term investments. Without the ability to view innovation from a systematic and lengthy approach, then the world will not be in a position to solve the problems it is currently facing. Some of the technologies such as energy storage, synthetic biology systems, bio-degradable plastic, and application for graphene are some of the innovations that are underway and nearing completion. Thus, their success will rely heavily on the patience capital coupled with other factors.

There is the need to consider the potential of energy generation, virtual reality, designing materials, educating people, and invention in medicines before concluding that innovations are slowing down. Besides, there are innovations that have disrupted markets in the past years such as the impact of the internet on magazines (Byrne, Fernald and Reinsdorf 2016, p.121). The results were that people had to incur higher costs but with increased accessibility. On the other hand, the primary focus should be on the standards and quality of inventions and not the period of conception. Thus, patience will allow the small game-changing technologies to scale up with time and further generate the economic advantages and benefits anticipated in an earlier period.

Conclusion

The slow growth in innovations has led to fewer game-changing technologies in the 21st century. In particular, the inventions rely on relatively old scientific reasoning and not necessarily new ideas. Therefore, the productivity of innovators is sharply declining. Secondly, investors are shying away from investing in technology projects are they assume that there are little opportunities remaining. For this reason, returns on investment will take a long period to materialize and this is not attractive. Thirdly, the innovators in the technological field do not receive adequate support from the government. Therefore, science has been left lagging behind. Concerning patenting, they have created a barrier as there are fewer collaboration efforts to bring about state of the art inventions. Lastly, trends in virtual reality have dominated the technological field which has seen ideas related to space exploration being overlooked. Hence, the hindrances innovators face has contributed to little game-changing technologies in the 21st century.

References

Andrews, D., Criscuolo, C. and Gal, P., 2016. The global productivity slowdown, technology divergence, and public policy: A firm level perspective. Brookings Institution Hutchins Center Working Paper, (24).

Bonaiuti, M., 2018. Are we entering the age of involuntary degrowth? Promethean technologies and declining returns of innovation. Journal of Cleaner Production, 197, pp.1800-1809.

Byrne, D.M., Fernald, J.G. and Reinsdorf, M.B., 2016. Does the United States have a productivity slowdown or a measurement problem?. Brookings Papers on Economic Activity, 2016(1), pp.109-182.

Cette, G., Fernald, J. and Mojon, B., 2016. The pre-Great Recession slowdown in productivity. European Economic Review, 88, pp.3-20.

Cowen, T., 2011. Great Stagnation. Penguin Group US.

Deb, S., Carruth, D.W., Sween, R., Strawderman, L. and Garrison, T.M., 2017. Efficacy of virtual reality in pedestrian safety research. Applied ergonomics, 65, pp.449-460.

Daveri, F. and Parisi, M.L., 2015. Experience, innovation, and productivity: Empirical evidence from Italy’s slowdown. ILR Review, 68(4), pp.889-915.

Gordon, R.J., 2015. Secular stagnation: A supply-side view. American Economic Review, 105(5), pp.54-59.

Hopenhayn, H.A. and Squintani, F., 2015. Patent rights and innovation disclosure. The Review of Economic Studies, 83(1), pp.199-230.

Lundvall, B.Å., 2017. Is there a technological fix for the current global stagnation?: A response to Daniele Archibugi, Blade Runner economics: Will innovation lead the economic recovery?. Research Policy, 46(3), pp.544-549.

January 19, 2024
Subject area:

Company Innovation

Number of pages

11

Number of words

3003

Downloads:

59

Writer #

Rate:

4.8

Expertise Innovation
Verified writer

I enjoyed every bit of working with Krypto for three business tasks that I needed to complete. Zero plagiarism and great sources that are always fresh. My professor loves the job! Recommended if you need to keep things unique!

Hire Writer

Use this essay example as a template for assignments, a source of information, and to borrow arguments and ideas for your paper. Remember, it is publicly available to other students and search engines, so direct copying may result in plagiarism.

Eliminate the stress of research and writing!

Hire one of our experts to create a completely original paper even in 3 hours!

Hire a Pro

Similar Categories